How to Choose ERP Software
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Choosing the right enterprise resource planning (ERP) software is a strategic decision that requires careful planning. ERP systems help you save time, increase accuracy, ensure compliance, and boost ROI. But picking the wrong tool can lead to wasted resources, more inefficiencies, and unnecessary compliance issues.
If you’re looking for a new ERP system, this guide is for you. It’s designed with CFOs and finance leaders in mind, who are looking to better understand the ERP selection process. In it, I’ll provide you with key tips to help you make informed decisions that align with your team's needs.
9 Things to Look for When Choosing ERP Software
Before you can begin developing an ERP strategy or deployment plan, you need to first find your vendor. Here are some things to consider when evaluating different providers:
1. Plan Flexibility
Plan flexibility allows you to adjust your ERP solution as your business evolves. However, it can lead to additional costs, if you’re not careful. Look for vendors offering clear and simple terms for changing plans without penalties.
Make sure to ask if they provide temporary upgrades during peak seasons to avoid unexpected fees. Review contract terms and speak with current users about their experiences with plan changes for more insight.
2. Data Access and Reporting
Data access and reporting determine how well you can track and analyze your business metrics. Look for ERP solutions with customizable reporting tools or visualization options. If your business requires more advanced data accessibility, consider looking into ERP BI systems.
During your demo, test all of the reporting features available and ask how they integrate with existing data sources to ensure nothing falls through the cracks during implementation.
3. Integration with Your Tech Stack
Most ERP software offer a variety of integrations so they can work smoothly with your existing systems. However, not all ERPs integrate with all software solutions.
When researching vendors, check if the ERP supports APIs or pre-built integrations with your current tech stack. This includes accounting software, customer relationship management tools (CRM), and other solutions.
4. Onboarding and Support
Onboarding and ongoing support are essential for a smooth transition to new software—for you, and your team. Ideally, you’ll want a vendor that offers advanced training and responsive support.
As such, make sure to inquire about the onboarding process and support channels available. Also consider reaching out to additional references to gauge the quality of their customer service from a UX perspective.
5. Role-Based Permissions
Role-based permissions control who can access what within the ERP system. This is important for maintaining security and compliance, especially if you work in more regulated sectors, like healthcare or cybersecurity.
Always ensure the software allows you to set detailed access levels for different roles. The best way to test this is by asking for a demonstration of the permission settings during a trial. That way, you can see permission access in action.
6. Industry-Specific Compliance
Compliance with industry regulations is non-negotiable, regardless of your industry. Choose an ERP that meets your sector's compliance standards, whether it’s HIPAA, GAAP, or IFRS.
Then, ask vendors how they handle compliance updates and what certifications they hold. Verify this by checking if they have clients in your industry and how they address regulatory changes.
7. Customization Options
Customization lets you tailor the ERP to fit your unique processes. But while it’s beneficial to have a flexible system that adapts to your needs, customization can quickly lead to extra costs.
Look for software that offers configurable workflows and user interfaces. During evaluation, ask for examples of customizations other clients have implemented, and whether or not additional modules or changes impact your overall cost.
8. Automation Features
Automation features can save time by reducing manual tasks, leading to streamlined operations and improved efficiency.
Seek enterprise software solutions with advanced automation capabilities like automated workflows and alerts. During your trial, set up a simple automated process to see how it works.
9. Mobile or Multi-Location Support
Mobile and multi-location support are vital if your team works remotely or across different sites. To achieve this, consider solutions that offer reliable mobile access and support collaboration.
Check for features like a mobile app, and examine how it handles data sync across locations. During a demo, test the functionality to ensure it's user-friendly and effective.
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How to Choose ERP Software: A 5-Step Framework
Choosing the right ERP vendor requires a clear strategy. It’s important that you align the software with your business goals and operational needs. If you don’t, it could lead to costly replacements and errors down the road.
Here’s how to avoid those pitfalls and find the right solution the first time around:
Step 1: Identify Your Needs
You can’t pick an ERP solution without knowing how it’ll impact your team and other functional areas. Before you start your search, you need to do some requirements gathering. These are the steps to take:
Gather Stakeholder Input
Engage key stakeholders like HR, finance, and IT to get a well-rounded view of different department needs. For example, IT might require better project management, while finance might need clearer reporting.
Consider holding meetings or workshops to discuss desired improvements and what success looks like to them. This collaboration helps ensure the solution meets everyone's expectations.
List and Prioritize Pain Points
After you speak to your team, create a list of their shared pain points and blockers that affect productivity, such as slow payment processing or increased data volume. Prioritize them based on impact and frequency, focusing on those that hinder daily operations the most.
Align with Internal Policies
Next to feedback, it’s also important to make sure your ERP requirements align with your company's policies and regulatory goals. Always check vendor preferences and security protocols in advance to ensure they meet compliance standards.
It’s equally critical to confirm that your ERP system can adapt to any regulatory changes. This alignment avoids future conflicts and ensures a smoother integration process.
Differentiate Must-Have Features
Once you have all the necessary insight, you need to whittle down your options. Start by distinguishing between features that are essential versus those that are nice to have.
Essential features might include real-time data access or integration with existing tools. Nice-to-have features, on the other hand, could be self-service portals and customizable dashboards or templates.
Consider which functionalities directly solve your team's top challenges and go from there.
Ask These Questions:
- What complaints or blockers come up most often?
- What needs aren’t being met today?
- What features would solve your top 3 pain points?
- What ROI are you expecting from this investment?
- How does the software align with our security protocols?
Step 2: Research ERP Software Vendors
Next, research and compare your top ERP software vendors to find the best solution that meets your team and business needs. Here's how to narrow down your choices:
Conduct High-Level Vendor Scans
Start with review sites, rankings, and case studies to get an overview of available ERP options. This helps you quickly identify potential vendors and understand their market reputation.
Look for patterns in reviews, such as common strengths or weaknesses, to drive your decision-making process.
Compare Based on Business Needs
Evaluate tools based on factors like business size and integration capabilities. During this step, it’s also important to decide on your ERP project deployment type: cloud-based, on-premise, hybrid, or two-tiered. Consider how each option supports your existing tech stack and scalability goals.
Identify Key Differentiators
From there, focus on unique aspects like implementation support or user experience. Determine which vendors offer flexibility for niche use cases that your business might encounter. This helps you find the best fit that addresses your specific business requirements.
Document Your Findings
Always keep a detailed record of your research to easily compare vendors later. In it, note key points like pricing, features, and limitations. This documentation will serve as a valuable reference when making your final decision.
Ask These Questions:
- What does each tool do best?
- Does it fit your team size, budget, and stack?
- What support and documentation are available?
- How does the vendor handle updates and maintenance?
- Are there any hidden costs or fees?
Top ERP Software to Consider
Here’s my list of the best ERP software options available, to help you get started in your search:
Step 3: Make an ERP Software Shortlist and Reach Out
At this point, you should know what type of ERP solution you want, and what features you need. Now, it’s time to start conversations with potential partners:
Shortlist Vendors
Select 2-4 vendors based on your earlier research. Focus on those that meet your needs and have strong reputations, such as Oracle NetSuite or Sage. This manageable list allows for deeper exploration without overwhelming your team.
Send an RFI or RFP
Consider sending a Request for Information (RFI) or ERP software RFP to gather more detailed information. This helps you understand each vendor's offerings and how they align with your requirements. Use this step to clarify any uncertainties and get a detailed overview of their capabilities.
Book Demos and Ask Questions
Schedule demos with your shortlisted vendors and prepare focused questions. Ask about key features, support, and compliance requirements that are important to your business processes. Also, make sure to inquire about demos and trial periods, so you can see the software in action and evaluate user experience.
Use Consistent Evaluation Criteria
During your scoring process, make sure to apply the same evaluation criteria across all vendors. This ensures a fair comparison and helps you make an informed decision. Consider factors like functionality, support, and cost to guide your assessment.
Ask These Questions:
- Can you walk me through a real customer story like ours?
- What support or onboarding resources do you offer?
- What features require an upgrade?
- How do you handle data migration?
- What is your typical implementation timeline?
Step 4: Build the Business Case
The ERP implementation process isn’t cheap. As such, you’ll need to transform your team and vendor research into a compelling business case to increase leadership buy in. Here’s how:
Summarize Pain Points and Outcomes
Start by clearly outlining the current pain points and the expected outcomes of implementing the ERP software. Show how the software addresses specific issues like data inaccuracies or inefficient workflows. Use bullet points to highlight key benefits and improvements your team can expect.
Present Cost Estimates and Timelines
Gather basic cost estimates and implementation timelines from your vendor conversations, then present this information concisely to provide a clear financial picture.
Refer to resources on ERP software pricing for detailed implementation cost insights. Make sure to include potential hidden costs and how they fit into your budget.
Articulate ROI and Risks
Explain the return on investment, total cost of ownership, efficiency gains, and financial or operational risks if you don't act. Use real-world examples to illustrate potential cost savings or productivity boosts.
Also, make sure to highlight the downsides of maintaining the status quo, such as missed opportunities or continued inefficiencies.
Ask These Questions:
- What business problem will this solve?
- What are the risks of doing nothing?
- What are the financial and operational upsides?
- How will this investment align with our strategic goals?
- What metrics will we use to measure success?
Step 5: Implement Your ERP Software and Onboard Your Users
To ensure a smooth onboarding process after your ERP software selection, you’ll need to follow these steps:
Communicate the Rollout Plan
Clearly communicate the rollout plan to all users to set expectations and timelines. Use meetings or emails to outline key dates, responsibilities, and what each team member needs to do. This transparency helps prevent confusion and ensures everyone is on the same page.
Assign Internal Owners
Assign internal owners and points of contact for the ERP implementation. These individuals will coordinate with the vendor and manage internal questions. Make sure they have the authority and resources to address issues and keep the project on track.
Ensure Training and Adoption
Ensure your teams complete training and adopt the tool consistently. Schedule training sessions and follow up with users to track progress. Provide resources like manuals or access to vendor training materials to support learning.
Create Feedback Loops
Establish feedback loops during rollout to gather user input and address concerns promptly. Utilize vendor resources for troubleshooting and support, and conduct regular check-ins to help you identify adoption barriers and improve user satisfaction before roll-out.
Ask These Questions:
- What’s the change management plan?
- Who’s responsible for roll-out?
- How will you track early success?
- What training resources are available?
- How will feedback be collected and acted upon?
What’s Next:
If you're in the process of researching ERP software, connect with a SoftwareSelect advisor for free recommendations.
You fill out a form and have a quick chat where they get into the specifics of your needs. Then you'll get a shortlist of software to review. They'll even support you through the entire buying process, including price negotiations.